The Economic Problem

Question 1

Define the economic problem

Answer 1

Unlimited wants but scarce resources

Question 2

Define opportunity cost

Answer 2

The cost of the best alternative foregone when a decision is made

Question 3

Define positive statement

Answer 3

A statement that can be proven

Question 4

Define normative statement

Answer 4

A statement that is subject to opinion

Question 5

What does a PPF show

Answer 5

All the possible combinations of two goods that can be produced, using all resources efficiently

Question 6

Outside the PPF line is ____________

Answer 6

Impossible

Question 7

Inside the PPF line is ____________

Answer 7

Inefficient

Question 8

On the PPF line is ___________

Answer 8

Efficient

Question 9

What does the straight line of the PPF show

Answer 9

Constant opportunity cost

Question 10

What does a curved PPF show

Answer 10

Opportunity cost is increasing

Question 11

What type of PPF is most common in real life

Answer 11

A curved PPF

Question 12

Why does opportunity tend to increase as more is produced

Answer 12

Because it becomes more difficult to produce higher numbers of a good

Question 13

Define: Consumer goods

Answer 13

Goods we consume

Question 14

Define: Capital goods

Answer 14

Goods we use to produce consumer goods

Question 15

By producing more capital goods, what will happen to PPF

Answer 15

It will shift out in the long run